Two and a half thoughts on Amazon’s Matchbook

Bridging the gap

Amazon’s announcement on Tuesday of its new Matchbook offer, allowing customers to buy discounted digital versions of print books they’d previously bought from the retailer, is far from the first attempt to bring bundling to publishing. As Peter Hudson, CEO of BitLit was quick to point out, his start-up has been offering something rather similar for a while now, and the impressive results Osprey imprint Angry Robot achieved with a trial administered in partnership with independent bookstores have already been documented here.

The model is becoming increasingly prevalent in other media industries. Many magazines and newspapers offer hybrid subscriptions that deliver a print edition to the subscriber’s letterbox and a digital version to their tablet or smartphone, while certain DVDs now come with codes by which the buyer can download a portable digital version. Indeed, Amazon’s own AutoRip, launched earlier this year, offers buyers MP3 versions both of CDs they purchase in future, and of those they’ve previously bought from the retailer.

There’s correspondingly a sense amongst some commentators that bundling ebook and print together is an idea whose time has come. Certainly, ever since ebooks started to take off, I’ve been told by people outside the industry that what they’d really like is to get an ebook edition thrown in when they buy a print title, and that they might even be willing to pay a small additional fee for the privilege. I’ve always wondered, though, whether demand would be sufficiently widespread for this to make financial sense for publishers and booksellers to offer this. After all, the people who say this to me tend to fit a particular niche: voracious readers whose attachment to print is such that they feel reluctant to buy ebooks though they’re aware of the benefits digital can bring.

It is precisely this demographic that Amazon is targeting with Matchbook, and that, I now realise, is why the move makes perfect financial sense for them. It doesn’t matter whether the masses take up this offer, what’s important to Amazon is that it attracts the hold-outs, those people who buy lots of print books, but have until now resisted the temptations of ebooks. If they start reading electronically as a result of Matchbook, whether on a newly-purchased Kindle or through the Kindle app, they’ll most likely continue to buy ebooks from Amazon in future, joining the massed ranks of those already locked into a closed reading ecosystem. The tweets I saw on Tuesday evening from people saying that this offer might finally tempt them into getting a Kindle, suggest that the move might succeed.

I mentioned Amazon’s AutoRip service earlier, and a number of people have drawn parallels between the two offers. For me, though, the differences between the two are more significant than the similarities. AutoRip gives you mp3 copies of your Amazon-bought CDs for free. This is a good thing for consumers primarily because it saves them time. If you own a CD, you can easily enough create your own mp3s from it – as Amazon itself acknowledges by calling its service AutoRip – but Amazon is saving you time by doing it for you automatically, and by adding the sort of convenience you get with streaming services such as Spotify by hosting it in the cloud. It’s nice, but it’s not really offering you anything you couldn’t do yourself with only a small amount of effort. Few people would be prepared to pay to save the time and effort involved in ripping a CD, so neither Amazon nor the record companies are losing out significantly by offering mp3s for free.

Matchbook, by contrast, is offering you much more. Though the technology exists for you to scan your own print books and thus turn your library digital, it’s currently some way from mainstream adoption. There’s still considerable appeal, therefore, to being able to buy cheap electronic copies of your favourite titles, which is why Amazon, along with certain publishers, calculate that they’ll be able to charge at least a nominal amount – up to $2.99 – for the ‘upgrade’. That they’re not asking for more suggests that both parties may have learned the key lesson from the music industry’s decline: that alienating your most valuable consumers is a sure route to irrelevance.

What Amazon has recognised – and we should too – is that Matchbook actually has less in common with its own AutoRip service than it does with the move from LPs to CDs. When the music industry introduced its shiny new format in the nineteen-eighties, it seized the opportunity to hike prices, reselling its most loyal customers music they felt they already owned at a premium price. In the process, it fatally disaffected its core customer base, the significance of which would not become apparent until nearly twenty years later, when the rise of Napster made piracy possible on an industrial scale. Feeling themselves exploited by the record companies, music-buyers happily returned the favour.

In setting such a low price for its own ‘upgrade’, Amazon is demonstrating once again that its relationship with its customers remains its key concern. In fact, I suspect that the retailer may have been happy enough to offer this service for free, and that the opportunity to charge has been offered to publishers as an incentive for them to sign up. The range from free to $2.99 seems designed as a triangulation between the twin dangers of failing to get publishers on board by not making it worth their while, and of alienating book-buyers by charging too much. The fact that of the erstwhile ‘Big Six’, only HarperCollins is so far reported to have made titles available, may suggest either that Amazon is steering closer towards the former hazard, or that publishers are understandably reluctant to strengthen the position of what many see as its greatest threat.

So, how might publishers effectively respond to this move, other than by refusing to make their titles available?

The advantage Amazon gains from MatchBook lies primarily in drawing new people into its Kindle ecosystem. The benefit is much diminished if that ecosystem suddenly becomes less closed. For this reason, perhaps now may be the time for publishers to drop DRM, or at least the form of DRM that ties readers to a single bookstore’s device or app. If readers can read their new ebooks on any platform, the gain to Amazon is at least mitigated. And, as I argued at the Media Futures/IxDA event last week (of which more in my next post), publishers will then be able to develop their own reading apps enabling them at last to establish a direct relationship with readers. But more of this next time…

First published at FutureBook on 5 September 2013

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